BUSINESS REPORTER
Zimbabwe Stock Exchange-listed clothing retailer Edgars Stores Limited intends to launch an equity capital raise through a rights offer transaction to existing shareholders with net proceeds of the offering to be channelled towards expansion of operations.
A rights offer entitles each holder of its ordinary shares to fully exercise his or her rights to buy additional shares of the company at a specific price and within a specific period. The transaction is usually on the basis of one right for each ordinary share held.
In a statement to shareholders, Edgars company secretary, Yuyo Nxumalo said the company was still engaged in discussions that involve a potential transaction that may have a material impact on the value of the company’s shares.
“The transaction involves raising capital for the company’s expansion initiatives through the issuance of shares by way of a rights offer. Further details of the transaction will be provided once discussions have been finalised. Shareholders are therefore advised to exercise caution when trading in the company’s shares,” Nxumalo said.
In its trading update for the Q3 ended September 6, 2019, Edgars’ turnover rose 154% compared to the prior year while units sold were 23% down.
“The group has not been spared from the impact of diminishing consumer purchasing power,” Edgars chief executive officer, Linda Masterson said.
The group’s earnings before interest, tax, depreciation and amortisation went up 604% to ZWL$52.5m in the reviewed period.
Total borrowings increased to ZWL$23m from ZWL$7.5m in prior year.
Finance costs increased by 240% compared to last year. Trade and other liabilities stood at ZWL$31m, which was a 264% increase from the prior year.
